Social Dilemmas

Definitions and Metaphors

Social dilemmas are formally defined by two properties: (1) each person has an individual rational strategy that yields the best outcome in all circumstances (the noncooperative choice); (2) if all individuals pursue this strategy, it results in a deficient collective outcomeeveryone would be better off by cooperating. Researchers frequently use experimental games to study social dilemmas in the laboratory. An experimental game is a situation in which participants choose between cooperative and noncooperative alternatives, yielding consequences for themselves and others in terms of their monetary outcomes.

The literature on social dilemmas has historically revolved around three metaphorical stories, the prisoner's dilemma, the public good dilemma, and the commons dilemma, and each of these stories has been modeled as an experimental game. The prisoner's dilemma game was developed by scientists in the 1950s. The cover story for the game involved two prisoners who are separately given the choice between testifying against the other (noncooperation) or keeping silent (cooperation). The outcomes are such that each of them is better off testifying against the other, but if they both pursue this strategy, they are both worse off than if they remain silent.

Table 1 Payoff Matrix for Prisoner's Dilemma

The public good dilemma has the same properties as the prisoner's dilemma game but involves more than two individuals. A public good is a resource from which all may benefit regardless of whether they contributed to the good. For instance, people can enjoy the city parks regardless of whether they contributed to their upkeep through local taxes. Public goods are nonexcludable: Once these goods are provided, nobody can be excluded from using them. As a result, there is a temptation [Page 778]to enjoy the good without making a contribution. Those who do so are called free riders, and although it is rational to free ride, if all do so, then the public good is not provided, and all are worse off. Researchers study primarily two public good dilemma games in the laboratory. Participants get a monetary endowment to play these games and decide how much to invest in a private fund versus a group fund. It is individually rational to invest in the private fund, yet all would be better off investing in the group fund because this yields a bonus. In the continuous game, the more that people invest in the group fund, the larger their share of the bonus. In the step-level game, people get a share of the bonus if the total group investments exceed a critical (step) level.

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